Mobile technology contributions to development in the fintech sector

From Africa to Asia, access to finance is vital to unlocking growth and development. Mobile technology is the key and with just about 62 per cent of the world’s population having a bank account, according to the reports from World Bank, mobile money has a lot of room for extraordinary development.

In the year 2011, the percentage was merely above the 50 per cent milestone, with 700-million people who were already having access to banking services for over the past three years. Since more billion-dollar businesses come up overnight in what were previously remote places of the world, and as old-fashioned, Western wealth fades away, disruptive technology is demonstrating an ability to be the fresh driving force behind the emerging markets.

Mobile payments technology is gradually granting access to finance for a wide range of individuals in emerging markets, as the upsurge of mobile bandwidth will increase the users’ experience in using mobile for their payments. This social trend is progressing from fixed to mobile.

Also, in banking services, which was previously too data heavy to be used through smartphones, but will profit from the 4G/5G mobile networks of the new generation which enable you to run some very complex applications on smartphones. This enables technological providers to go into the retail banking service industry for a portion of the cost of an old-fashioned bank. It is the technological driver, which permits a much lower pricing for its retail clients, as commissions are obviously more competitive in the industry. We are observing small, nimble companies, who have virtually no hierarchy and even more transparency, who are challenging the Goliaths of the business.

In Asia, China has over a billion mobile subscribers and out of this number, 60 per cent of them make all purchases using their smartphones. In the year 2014, the sum total transaction value of the online shopping market of China greatly exceeded RMB2.8 trillion which when converted to dollars is approximately, $453.61 billion. This clearly shows an increase of about 48.7 per cent according to the latest report from iResearch.

Reports from China’s National Bureau of Statistics also states that online shopping accounts for about 10.7 per cent of the total retail value in China. The country is endowed with the world’s largest mobile subscriber base as observed at the Shenyang Euromoney conference. It was also pointed out that the mobile e-commerce industry in China is rising speedily and as more and more buyers prefer to buy their goods using just their mobile phones. To encourage consumption, and also to facilitate the exchange, a lot of mobile functionalities could be advanced, such as information exchange, location-based services, and the mobile wallet. This Provision of an e-commerce web experience, which is optimised for mobile, is also an opportunity to capitalise on revenue and engagement in China.

In the same vein, in Africa, approximately less than a quarter of people operate a bank account, according to reports from a Financial Times article which was dated January 2015, but more than 80 per cent of these same people have access to mobile phones.

It has been projected by McKinsey & Company that around 80 per cent of this continent’s population is not connected to any formal financial services. Reports from MasterCard stipulate that only about 2 per cent of the retail transactions in Africa are done electronically. Kenya’s popular mobile operator, Safaricom is on the lead of how technology is giving access to finance to isolated or inaccessible African villages. The mobile network’s mobile money transfer and the payment service called M-Pesa was launched in early 2007. In recent times, the company’s joint venture agreement with KCB, the biggest bank in the country, began making available unsecured loans, which can go as high as Ks5m.

Mobile money is now adding millions of people in Africa in the financial services industry, even though there is so much work to be done in this regard. International and local mobile technology providers have merely scratched the surface in terms of a financial inclusion.

Both governments and regulators in these underbanked areas of the world have to create stress-free access for technology providers to benefit entirely from the addition in the financial services sector.